Why liberal approaches to migration won’t work

While he was a member of the coalition government, Vince Cable was one of the main proponents of a liberal immigration policy, in particular arguing for greater openness to Indian migration as a necessary and even beneficial component of an EU-India trade deal. So his apparent conversion to opposing EU free movement has hit the headlines. In practice, I don’t think his approach has fundamentally changed, but it was wrong when he was in government and it’s wrong now, too.

Vince has always been on the social democratic wing of the Liberal Democrats, and we had reason to be grateful for that as he acted as possibly the most effective drag anchor on the Conservative instincts of the coalition government. His argument for staying in the EU customs union, and for stressing the need for the government’s Brexit agenda to focus on the employment and economic impacts, is motivated by objectives we share. But Vince is a genuine economic and social liberal, in the classical political definition of the terms, and that’s at the root of the problems with his views on immigration.

His latest foray into the field, in the New Statesman, lists a number of concerns that a liberal immigration system does indeed find challenging, because there aren’t individual or individualist solutions. These concerns are – fundamentally – not about what individuals feel or think or do, but about how the system works. And the solutions to the problems Vince identifies require collective approaches. Here are three of them.

First, he writes that:

“British opposition to immigration is mainly colour-blind. Until well into the 1990s ‘immigration’ was code word for race.”

The perception that concerns about East European migration are somehow different from concerns about black and Asian migration is ahistorical. Tell it to the Huguenots, the Jews, or – until very recently indeed – the Irish. And many of the concerns about new arrivals from southern and eastern Europe – about the exploitation that leads to undercutting and competition for low-paid work has even applied to the people a previously commonly male workforce shared their homes with – their wives and daughters.

The response to the entry into the labour force (or re-entry, but for once in peacetime) of women that occurred in the 60s and 70s, was not so much hostility to women’s employment, or restrictions that have kept women’s participation rates much lower even in other countries of Europe (although there have been periodic attempts to blame women for men’s employment and even academic problems.) Instead, we had equal pay legislation, the expansion of childcare, and sex discrimination laws more generally, as well as the growth of the women’s movement inside trade unions: women’s committees and conferences, equality officers and reserved places on executives, often designed precisely to make sure that collective bargaining addressed women’s as well as men’s concerns.

Second he writes that:

“One uncomfortable feature of the referendum was the large Brexit vote among British Asians, many of whom resented the contrast between the restrictions they face and the welcome mat laid out for Poles and Romanians.”

But it’s common for the main opposition to the newest wave of immigration to be strongest among precisely the previous group of immigrants, who are most likely to be competing with them for the lowest-paid jobs, services and housing in the poorest areas. Anyone familiar with the East End of London will know how hostility to Jews in the first half of the 20th century (ironically, mostly from eastern Europe themselves) gave way to concerns about the Bangladeshi and Pakistani arrivals of the second half of the century, and has now given way to concern about Poles, Romanians and Bulgarians.

What’s different about the East End of London is that those pressures, those concerns, were addressed by campaigners who drew attention to what the local people and new arrivals had in common rather than what separated them. We’ve just celebrated the 80th anniversary of the Cable Street resistance to Mosley’s fascists which united the different working class communities of the area. Similar attempts to stir up anti-Asian racism in the 80s and 90s failed too, and the rout of the BNP in Barking, where many of the original East Enders have moved, showed the possibilities of community cohesion.

And thirdly, he writes that

“People moving from high unemployment, low productivity countries to areas of labour scarcity and higher productivity produce economic gains. But the benefits accrue mainly to migrants themselves (and business owners)”

And he adds that – this is worth quoting at length –

“There are also distributional effects. Critics complain that immigrant workers depress wages and reduce job opportunities for natives. Undoubtedly, this happens in some occupations, like building and taxi driving. But there are other areas where immigrants are not competing and bring complementary skills, creating jobs. When I was secretary of state I commissioned studies to evaluate this. The conclusions were sufficiently reassuring that the Home Office blocked my department’s wish to publish them. Losers, however, there undoubtedly are.”

This is the core of the trade union movement’s approach to migration and free movement, and it is an agenda that is shared across the European Union through the European Trade Union Confederation. The answer to the distributional challenges raised by migration is redistribution, effected through stronger collective bargaining to prevent exploitation and undercutting (sectoral collective bargaining in industries like construction and taxi driving, for instance, where it is often individualist bogus self-employment that has underpinned the problem); propped up by laws that prohibit exploitation and require equal pay for people doing the same jobs in the same workplaces; and supplemented by measures such as the Migration Impact Fund which we called for before the last Autumn Financial Statement.

But all of the solutions that I have advanced above to the problems Vince has raised are collective responses, not individual ones, and that is the heart of the problem with liberal approaches to immigration. Just like the response of politicians who want to close the border, people who want to throw the borders open are not solving the problems migrants or the existing population face, and both risk stirring up division, tension and violence by posing one group’s interests against another’s.

Individual migrants are not to blame for their own exploitation, and individuals who express concerns about that migration are not racists. In demanding better wages and more skilled jobs, more council housing that they can afford and an end to cuts to public services, they have more in common than divides them.

Written by Owen Tudor

I’ve been the Head of the TUC’s European Union and International Relations Department since 2003 and have worked at the TUC since 1984. I’ve been a member of the Health and Safety Commission, the Civil Justice Council, the Social Security Advis…

3 Responses to Why liberal approaches to migration won’t work

In his response to Vince Cable’s observations on immigration Owen Tudor is not alone in inadvertently committing the frequent economics solecism (one he is sure to correct) of basing a proposition on a premise which is assumed, but not proven, to have an evidential base. His proposed solution by redistribution of the distributional challenges caused by immigration has relevance only if there is something to distribute. Unfortunately evidence in respect earnings, fiscal dividends and housing pressures would indicate that in the UK there is very little to distribute.

In respect of earnings Paul Johnson of the IFS, of which I am a member, has made it brutally clear that since 2008 and allowing for inflation, median earnings for those under 59 have not increased, indeed for the young they are down 7%. Therefore substantial immigration during this period has had no beneficial effect on earnings whatsoever nor consequently on the overall tax take.

However to identify whether there are nevertheless positive tax contributions from migrants within the overall tax take we go back to the seminal Dustmann/Frattini report from UCL in 2013 which assessed the EU migrant fiscal dividend as about £20bn from 2001 t0 2011 (11 years). HMRC and the TUC have continued with this assessment of between £2-£2.5bn annually. UK annual public expenditure is about £760bn. The EU migrant dividend is therefore 0.3%–about the same percentage as health tourism is to the NHS budget and just as insignificant!

Not much to distribute there then but the real problem is the impact of immigration on housing. Labour and Lib-Dem peers, being a substantial majority of the Lords’ Housing Committee, deserve recognition for their integrity in drawing attention to (and against their parties’ policies) the effects of immigration in its substantial report (Building More Houses July 2016) which took evidence of more than 150 published witness submissions (including from the writer). They identified the impossibility of building anywhere near enough houses to counter an increased population that the ONS earlier projections show as about 530,000 pa based on a net migration figure of 265,000 pa. With that NM number being 330,000 pa the reality is that population growth is now running at 600,000 pa. The ONS assess that 70% of this increase is due to direct and indirect immigration.

The constant flow of migrants, with the blessing of the TUC, has entrenched the dominance of the private landlord who has provided the only supply available to migrants at the expense of the owner occupier. The Resolution Foundation now think that owner occupation is down to 50%. The old and wealthy are hoarding the property in which the young huddle at crippling rental cost. In London the tax paid by the landlord on a rent can now exceed the income tax paid by his tenant.

This is an appalling crisis. Immigration, population and housing statistics are extensive and complicated and challenge received wisdom. For example the Migration Advisory Committee’s July 2014 report on low paid migrants is the thick end of 400 pages but its conclusions were clear. Immigration benefits primarily migrants themselves (for which absolutely no blame is attached) and the owners of capital. No other significant benefits were identified.
Both Labour and the TUC seem to lack the economic and statistical will or, it has to be said, the forensic academic abilities, required to get to grips with this issue. Reading, instead of ignoring, the Lords housing report would be a good start in recovering credibility and re-joining the currently unfashionable consensus of experts.

Dear Martin, many thanks for commenting, and apologies our word limit kicked in. I accept that the migration dividend in terms of net exchequer contributions are small (although they’d be higher if we could tackle low pay better), but £2bn a year is still a sizeable sum, compared with, say, the £25m a year the Home Office ‘Controlling Migration Fund’ is providing local authorities every year, or even the £280m a year that the TUC has proposed as a starting point for a new Migration Impacts Fund. And the existing net exchequer contribution is not the only source of funds for such redistribution: we could tax the increased returns to capital that you and Vince acknowledge, for example. Further controls on rogue landlords would also assist with the housing crisis, but the simple answer to the current housing shortage is that we must return to council house building on a significantly increased scale.

Dear Owen It is kind of you to take the trouble to respond but I would be less than honest if I denied that thoughts of the longest suicide note in history have crossed my mind. One should be wary of personal circumstances influencing conclusions that should always be evidence based but my views on immigration and housing should be seen in the context of my having a wife and son of Caribbean origin and also being a private landlord. Migration has provided the unearned income which allows us to public school educate our son whilst the black side of the family, especially the young, face a future of low uncertain earnings and the impossibility of home ownership because buy to let landlords, like me, have invaded the owner occupier space.

On earnings it is illogical to quite rightly draw attention to their low levels, as I do, but it must then be morally questionable to support a policy which guarantees a surfeit of labour underpinning the dominance of capital over employees. And not just capital-the state can screw down NHS wages because it always can and does pull in staff from abroad to fill vacancies. Surely the words that unions most want to hear should be from employers whinging that they cannot recruit staff, dressing up low wages as a threat to the national interest. Surely restricting rather than adding to the pool of EU labour standing at the UK dock gates would oblige employers to raise wages and productivity levels. Isn’t that what the TUC is supposed to do?

But it is your view that there is ‘a simple answer to the housing crisis’ which is so difficult to understand. There is no ‘answer’ to the housing crisis, just the management of the speed of deterioration. There are 1.6m families on housing waiting lists plus the ‘concealed’ households of singles and couples estimated in millions. We all supported the golden age of post war council housing but that was at a time of stable populations. In 1982, 2 years after Thatcher introduced rights to buy, the population actually fell. Building made a difference. Contrast this year when the population increase will be running in the region of 600,000 on top of the existing crisis.

The Council of Mortgage Lenders in its evidence to the Lords’ housing report illustrated the limitations of any house building programme, no matter how desirable. It stated that even if 225,000 (50% more than now) new homes were built annually for the next ten years 90% of that target has already been built. Those 2.2m homes would cost about £550bn, a third of the National Debt, but have to be set against not just the existing desperate shortage but also against a population increase of 6m over the same period. 70% of that increase is the result of immigration, although statistically the rate of household formation is rather less, but those levels remain the primary but controllable source of housing pressures. (Not price–that is down to availability of finance) In these circumstances it is absurd to require local authorities to take on massive debt to attempt to increase housing availability in their area only for it to be continually compromised by an unknown but in essence an infinite external demand exacerbated by the matching fiscal housing transfer to the place of origin of that demand. Trying to deal with symptoms whilst ignoring causes is as rubbish in economics as it is in medicine.

The current policy outcome of ensuring a constant tenant supply thereby shovelling money into the pockets of private landlords (who believe their position will protected by any government because they house the majority of migrants) requires a re-think to counter a justified view that the TUC has lost its way by relying on principles that increasingly look like ill-informed prejudices propped up by self-righteousness. I am sorry to be so blunt but for those of us who think we need trades unions more than ever it is frustrating, and even embarrassing, to see the TUC dismissing the overwhelming evidence of experts and dancing to the tunes set by capital and neglecting the older and more robust Marxist mantra that mass migration is the tool of capitalism, which it is so clearly proving to be.